Stages leading to neoplasia of human and hamster cells are being dissected to determine their biological importance in chemically or physically induced carcinogenesis. After synchronization by metabolic block, cells derived from a carcinogen-treated standard human cell strain show dose-related colony growth in agar. These colonies form multifoci that invade chick embryonic epidermis. Promoted and nonpromoted hamster cell transformations have a differential sensitivity to lymphotoxin. Furthermore, lymphotoxin is inhibitory even prior to carcinogen insult. Promotion is also inhibited by phytohemagglutinin (PHA) but only in the presence of a promoter. Lymphotoxin induces a new physiological state, whereas PHA hinders promoter binding to the cell surface. Although a positive correlation exists between the induction of sister chromatid exchanges, cytotoxicity and transformation, promotion is not associated with chromatid alterations. DNA metabolism studies indicate that 06-methylguanine is the lesion responsible for the initiation of carcinogenesis induced by methylating agents. Finally, transfection studies indicate that DNA sequences induced by carcinogen treatment are responsible for the initiation and maintenance of the transformed state.